VOD, DVD Releases Converge

The phrase “Coming Soon” has taken on new meaning for studios, as more movies hit video-on-demand at the same time as DVD or, in some cases, their arrival in theaters.

“There was a lot of concern initially about bringing the date closer because packaged goods are such an important part of the studios' business,” says Andy Mellett, VP of digital distribution at Warner Bros.

But that concern is waning. According to Rentrak, in the first quarter of 2009 the major studios doubled the number of titles that were released day-and-date on VOD and DVD compared to the fourth quarter of 2008.

“There is a lot of momentum and buzz around day-and-date,” says Rob Jacobson, president and CEO of iN Demand.

“I think we'll see this trend accelerating in the future until day-and-date becomes the norm,” adds Doug Sylvester, COO of TVN Entertainment.

And it's not just the on-demand folks touting the trend. “It is good for the overall business,” WB's Mellett points out. “Now a 30-day window seems impossibly long—you're losing all your momentum. Our longest window is usually 14 days to VOD, and we envision having fewer of those.”

Motivating the studios to speed titles to VOD has been the pressure to exploit awareness of a film in an increasingly cluttered entertainment market, as well as the hope that VOD availability would limit the value of DVD piracy.

Win-win…win?

Cable operators are obviously enthusiastic supporters of day-and-date, with Comcast and Time Warner leading the pack. “It's pretty intuitive,” says Derek Harrar, Comcast senior VP and general manager of video. “The movies are being promoted by the studios when the DVD comes out, so the movie is much more front-of-mind for consumers.”

In 2006, Comcast developed a two-year trial working with eight movie studios to measure VOD usage, DVD sales and DVD rentals (which Harrar says were more difficult to measure).

Harrar says the trial, which began with the Warner Bros. release of The Astronaut Farmer in 2007, showed a huge boost in VOD without hurting DVD sales.

Jacobson says studios have sought titles likely to have lower sales and higher rental potential for their day-and-date releases. “That way, their retail partners like Wal-Mart and Best Buy won't be as upset,” he explains.

But not everyone is on board. According to Jacobson, Universal has just “put its toe in the water.” Other studios, including Sony, Paramount and Disney, are largely resistant to day-and-date and, to a lesser extent, to even shrinking their DVD-to-VOD windows.

Still, Harrar and Mellett say competition will force the studios' hand and, according to Sylvester, the hard breaks between platforms will “continue to erode and then go away.”

Another major barrier also began eroding in 2006, albeit on a much smaller scale. In the last few years, some independent films—mostly from IFC Entertainment and Magnolia Pictures/HDNet—have been released day-and-date theatrically and on-demand.

Lisa Schwartz, IFC Entertainment's executive VP of distribution, says the move makes strategic sense for films like Steven Soderbergh's two-part Che or Italian import Gomorrah. “Not every town has an art-house theater, so we're getting a different exposure, which is great for the consumer and the filmmaker, too,” Schwartz points out.

Last year, IFC added Festival Direct on Demand for films that hadn't yet made it past the festival circuit. Magnolia has done the same with films like Soderbergh's The Girlfriend Experience, which just “opened” on HDNet weeks before its theatrical appearance.

Sylvester does not rule out the possibility that a major studio might eventually try releasing a blockbuster film day-and-date with VOD. “People would pay a pretty hefty premium, like they do for a pay-per-view event, to see a movie opening weekend, if not soon after,” he says.

“It's certainly a good thing to look at,” Mellett adds, “but it's much further off.”